Offshore Credit Card

An offshore credit card is a credit card linked to an offshore bank account. Offshore credit cards typically come in the widely recognized brands, such as, Visa and Mastercard. While they function essentially the same as a traditional credit card from a merchant's point of view, the holder of the card typically has the card linked to an offshore bank account held in an offshore bank, often in an offshore financial center.

What is the advantage of an offshore credit card?

The primary advantage to the holder of an offshore credit card is that it provides convenient, direct access to his offshore bank account. In the past, the time and expense involved in completing offshore bank wires, and offshore bank transfers meant retrieving smaller sums of money from a depositors offshore bank account was difficult. If the offshore bank account holder wanted to withdraw funds, he would either pay a disproportionately large percentage of his withdrawal in fees, or be forced to move a larger sum to his or her domestic bank account.

How do offshore credit cards work?

Offshore credit cards work almost identically to domestic credit cards. The cards typically have a Visa or MasterCard label, are accepted at more than 14 million locations worldwide and provide cash advances at several hundred thousand automatic teller machines and banking institutions around the world.

Despite their similarities, some differences exists between domestic and offshore credit cards. The vast majority of reputable offshore credit cards are "secured" cards. They require offshore investors to provide a security deposit with their application for the card and therefore do not require offshore investors to go through credit checks. The amount of the security deposit varies between institutions, but normally ranges from 125% to 150% of the credit line requested (e.g. at 150%, a credit line of $20,000 requires a security deposit of $30,000), although some issuing institutions require security deposits as high as 200% of the credit line requested.

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